Building coffee platforms

The Great Divide: A Look Into Melbourne Cafe Culture | Part 2

Part 2

In Part 1 I looked at the parallel between the mature, highly-competitive markets that Richard Branson chooses to disrupt (commercial airlines, finance, music, telecommunications) and the Melbourne Coffee market. The coffee market in Melbourne is in desperate need of disruption by new startups.

Mature, highly competitive markets have deeply entrenched inefficiencies and strong political and cultural skews. New players are able to take advantage of these inefficiencies and political and cultural skews. The current players, those with the most to lose, are nervous and here’s why…

Cafes are starting to shake free from the shackles of mono-roaster loyalty that was central to the third-wave movement. While there are plenty of articles about the third-wave coffee movement I will be focusing on this third-wave as a market segment within the overall coffee market in Melbourne.

Mono-Roaster-Loyalty

In the nineties and naughties Melbourne cafes who wanted to differentiate themselves from their competitors and respond to growing demand and appreciation for specialty or artisan coffees opted for an approach of abject loyalty to proven roasters such as the big 5. While there are now a plethora of specialty coffee roasters, and some specialty cafes do roast their own beans, the characteristic of the third-wave market segment was typically and uniquely to align ones business with a market leading roaster. These roasters have served the third-wave segment well, and are providing exceptional quality specialty coffee, however the cafes are asking for more.

Multi-roaster-convenience

While it suits the larger roasters to supply a coffee machine, and beans, and chocolate to cafes, cafes who are wanting to continue to push the bar in realms of quality and customer feedback are realising that they are unable to grow within the confines and support of the major roasters. This third-wave segment was in the nineteen nineties a smaller niche within the Melbourne Coffee market it is now a majority market which can now be further segmented into the following sub-segments:

Pop-up specialty such as Halyard

Filter coffee specialty such as Assembly

Micro-roaster specialty such as Maling

Fine dining Specialty such as Top Paddock

Roaster Specialty such as Brother Thomas

Mobile Specialty

Cafes are wanting to be free from the ceilings places on them by mature and highly-competetive roasters who were able to meet the needs of the specialty coffee market in the nineties and naughties and who aren’t able today.

There is a new ceiling

While many of the larger roasters are doing a fantastic job at all of the above, very few are doing enough to satisfy the growing needs of a community of specialty cafes that want to grow outside of the protective greenhouse that took them to where the are now.

– Cafes who want to use single origins from a local micro-roaster are not allowed by their contract
– Roasters only supply one brand of filter equipment and are unwilling to support foreign brands
– Support has dwindled over time as the company has grown and has diluted original support offerings
– Advancement in training and development has been moved to second place as growth takes over

We’re nervous!

One leading industry professional said that their roaster is nervous about the growing demand for multiple-roaster-convenience as their market share is being directly impacted. Lets make it plain and simple:

Mono-Roaster:Example: A cafe is being supplied 30 kilograms of a blend, 10 kilograms of singles and 3 kilos of Chocolate by their Roaster. In this example the roaster is making $900 from blends, $400 from singles and $36 from chocolate = Total = $1336. The roaster is happy.

Multiple-RoasterThe same cafe received 20 kilograms of a blend from their roaster, and 20 kilograms from a new start-up roaster, and their Chocolate from Mork. In this example the original roaster is making $600 Total, while Mork is making $60 from the Chocolate, and a new micro-roaster is making $800 for singles. Everybody is happy! Actually the original roaster has lost $736 in sales.

There is a new wave or generation of roasters who are happy to share the market for the benefit of the cafes and the customers. I hope the innovation and pioneering spirit of the original specialty roasters who paved the wave, whose wake we are riding, are willing and able to stop and change their political and cultural skews and adjust.

One roaster suggested that there were too big to change and adapt to the new demands of the cafes in this brand new day. There is a Great Divide in Melbourne Cafe Culture however the divide is not between the cafes and the customers, it is between the roasters who will be able to see the change that has arrived, and adapt to serve the demands of this growing exciting forth evolution of cafe culture: multiple-roaster-convenience.

One thought on “The Great Divide: A Look Into Melbourne Cafe Culture | Part 2”

Excellent article Jonathon. We fit into two of the categories identified – namely mobile coffee and consumers of micro-roasters.

We also identified at the outset of our business planning stages early that to remain agile and responsive, we needed to own our equipment and not take a “free on loan” arrangement from the big roasters. This affords us flexibility and allows us to “vote with our feet” if we experience constant quality issues. By having The Maling Room as our roaster, we have direct access to the roasting team and can share thoughts, ideas and experiences thereby affording us a mutual understanding of quality and success based outcomes.